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Strategy researchers are increasingly turning their attention from examining the impact of strategic choices on firm performance to examining the factors that determine strategic choices at the firm level. This shift of research orientation has meant that researchers are increasingly faced with a limited dependent variable (LDV) that takes a limited number of usually discrete values, for which LDV methods such as logit or probit are required. Despite their growing popularity, there appears to be widespread problems in the use of LDV methods. This research note complements recent studies that offer general guidelines by presenting and illustrating the practical steps needed to implement the methods essential for analyzing and interpreting the results from LDV models. Copyright © 2009 John Wiley & Sons, Ltd.

This study examined the relationship between the demography of top management teams and corporate strategic change, measured as absolute change in diversification level, within a sample of Fortune 500 companies. Controlling for prior firm performance, organizational size, top team size, and industry structure, we found that the firms most likely to undergo changes in corporate strategy had top management teams characterized by lower average age, shorter organizational tenure, higher team tenure, higher educational level, higher educational specialization heterogeneity, and higher academic training in the sciences than other teams. The results suggest that top managers' cognitive perspectives, as reflected in a team's demographic characteristics, are linked to the team's propensity to change corporate strategy. The ability of an organization to anticipate and respond to opportunities or pressures for change, both internal and external, is one of the most important ways in which its competitiveness and viability are ensured. The nature and effectiveness of organizational responses vary in part with how top management triggers and interprets strategic issues (Dutton & Duncan, 1987; Kiesler & Sproull, 1982). Management's role in defining the "developments and events which have the potential to influence the organization's current or future strategy" (Dutton & Duncan, 1987: 280) provides a major link between a firm and its external environment. This inquiry examined the link between top management teams and corporate strategic change, defined as absolute change in diversification level. By focusing on top management teams, we followed the tenets of the strategic choice perspective (e.g., Andrews, 1971; Child, 1972) rather than the more deterministic assumptions of population ecology (Aldrich, 1979; Aldrich & Pfeffer, 1966; Hannan & Freeman, 1977) or "life cycle" models (Greiner, 1972; Quinn & Cameron, 1983). A firm's top management teamthe "dominant coalition" of individuals responsible for setting firm direction (Cyert & March, 1963)-identifies environmental opportunities and problems, interprets relevant information, considers organizational capabil-We would like to thank Richard Brahm, Susan Jackson, Barbara Lawrence, Anne Tsui, and this journal's reviewers for their helpful comments on earlier drafts of this article.

/-The resource-based view of the firm has provided important new insights into corporate strategy (Barney, 1991; PeteraJ 1993); however, there has been only limited empirical research linked to the theory (e.g., Farjoun, 1994). Although a great deal of work has been done on Corporate diversification, the measures and data typically have a weak connection to resource-based theory. Empirical research on resource-based corporate strategy has been particularly dificult because key concepts such as tacit knowledge or capabilities resist direct measurement. This study is an effort to narrow the gap between theory and empirical research on the multibusiness firm. It develops a resource-based approach to modeling interrelationships among businesses and applies it to the analysis of corporate economic performance. This approach proves to be significant in explaining the financial performance of large manufacturing firms, and it promises to be an important source of insight into corporate strategy.The impact of corporate strategy on the economic performance of firms has been a central concern of strategic management for three decades. From Chandler's (1962) pioneering work on strategy and structure to contemporary studies of the 'core competence' of the corporation (Prahalad and Hamel, 1990), researchers have examined the effect of combining multiple businesses within a single organization. Few topics have attracted as much attention as the effect of interrelationships among businesses on economic performance, and few issues have greater importance to the formulation of strategy.

While poor firm performance has been shown to be a predictor of CEO dismissal, little is known about the role of external constituents on the board's decision to dismiss the firm's CEO. In this study, we propose that investment analysts, as legitimate third‐party evaluators of the firm and its leadership, provide certification as to the CEO's ability, or lack thereof, and thus help reduce the ambiguity associated with the board's evaluation of the CEO's efficacy. In addition, the board tends to respond to investment analysts because their stock recommendations influence investors, whom the board wants to appease. Using panel data on the S&P 500 companies for the 2000–2005 period, we find that negative analyst recommendations result in a higher probability of CEO dismissal. Copyright © 2011 John Wiley & Sons, Ltd.